Customer Base Growth
Is the number of customers, subscribers, or accounts growing after subtracting those who leave? This measures how well the company wins new buyers, separate from how much each buyer spends.
The day Netflix shrank
On April 19, 2022, Netflix told shareholders something it had not said in more than ten years: it had fewer paying members than three months earlier. It had forecast adding 2.5 million members in the quarter. Instead it lost 200,000, and it expected to lose another 2 million in the next quarter.[^1]
Revenue was still growing, up 9.8% from a year earlier.[^1] It did not matter. The next day the stock fell 35%, wiping out more than $50 billion of market value.[^2]
Why panic about a company whose sales were still rising? Because revenue is the result, and the customer count is one of its causes. Netflix admitted that, on top of its 222 million paying households, its service was being shared with more than 100 million households that paid nothing.[^1] Without new paying customers, future growth would depend almost entirely on charging existing ones more.
The letter is worth reading closely, because it takes the customer count apart the way this chapter will. Some of the loss had a one-time cause. Netflix had shut down its service in Russia after the invasion of Ukraine, which cost about 700,000 members. Without that, it would have added about 500,000. But that was still a fifth of what it had forecast, and an eighth of the 4.0 million it had added in the same quarter a year earlier. The letter named the real problem plainly: "The main challenge for membership growth is continued soft acquisition across all regions." Fewer new people were signing up. Retention, it said, was "slightly lower" than forecast but still "very healthy."[^1] In other words, the flow of new members coming in had slowed more than the flow of members leaving had grown.
Netflix also explained why sign-ups had slowed. Its "relatively high household penetration," meaning the share of homes that already watched it, counting the ones borrowing a password, "combined with competition, is creating revenue growth headwinds." The "big COVID boost to streaming," it added, had "obscured the picture until recently."[^1] A burst of sign-ups during the 2020 lockdowns had made the slowdown that followed harder to see.
Three months later, the loss turned out smaller than feared: 970,000 members, against the forecast of 2 million.[^3] But the market had already learned the lesson. A company can keep growing revenue for a while by raising prices, yet if the number of customers stops growing, investors start to ask how long that can last.
The story has a second half. In May 2023, Netflix rolled out "paid sharing" across most of its big markets, charging for borrowed passwords.[^4] Net additions in the third quarter of 2023 were 8.8 million, up from 2.4 million a year earlier, which Netflix credited to "the roll out of paid sharing" along with its programming and growth abroad.[^5] The fourth quarter brought 13.1 million, its largest fourth quarter ever.[^6] Paid memberships rose to 260 million at the end of 2023 and 302 million at the end of 2024.[^7] Many sharing households became paying ones. Notice, though, that average revenue per member fell 1% in the third quarter of 2023, partly because more of the growth came from countries where Netflix charges less.[^5] More customers and less money from each can happen at the same time, which is why this chapter keeps the two apart.
Then, from 2025, Netflix stopped reporting its member count every quarter.[^7] That is part of the lesson too: a customer count only helps while you can see it.
What customer base growth is
A company's customer base is the number of people, households, or businesses that buy from it. Depending on the company, the unit might be called subscribers, members, accounts, lines, or active buyers.
Customer base growth asks: after counting everyone who joined and everyone who left, did the number go up, stay flat, or go down? It is about how many customers there are, not how much each one spends. Spending per customer is a different thesis, Existing-Customer Expansion.
How to measure it
Three numbers do most of the work:
- Gross additions (gross adds): every new customer who joined during the period.
- Churned customers: every customer who left. The churn rate is the share of customers who leave in a period, often stated per month.
- Net additions (net adds): what is left after subtracting one from the other.
Net additions = Gross additions − Customers lost
Customer growth rate = Net additions ÷ Customers at the start of the period
Churn rate = Customers lost during the period ÷ Customers at the start of the period
Picture a gym that starts the year with 1,000 members. During the year, 400 people join and 300 cancel. Net additions are 400 − 300 = 100, so the customer base grew 100 ÷ 1,000 = 10%. Annual churn was 300 ÷ 1,000 = 30%.
Think of the customer base as a bucket with a hole in it. Gross adds are the water you pour in; churn is the leak. The gym had to win 300 members just to stand still.
Small monthly churn rates add up. A company that loses 1% of its customers each month keeps 0.99 multiplied by itself twelve times, about 88.6%, so it loses roughly 11% a year. Churn also tells you how long a customer stays: at 30% a year, the average gym member lasts about 1 ÷ 0.30 ≈ 3.3 years.
The last piece is the customer acquisition cost (CAC): the marketing, sales, and discounts spent to win each new customer. If the gym spends $20,000 on ads and sign-up deals and wins 400 members, its CAC is $50.
Why it matters
Customers are an asset that never appears on the balance sheet, yet investors price them. In a classic study of cellular phone companies, Eli Amir and Baruch Lev found that earnings, book values, and cash flows were, on their own, "largely irrelevant" to stock prices, while customer measures such as market penetration were "highly value-relevant."[^8] A 2015 study of subscription companies combined subscriber counts, churn, revenue per user, and service costs into one "customer franchise" value. It explained stock prices beyond what earnings did and helped predict future earnings.[^9]
Marketing professors Sunil Gupta, Donald Lehmann, and Jennifer Ames Stuart valued companies by valuing their customers: each customer is worth the profits they will bring over their life with the company, discounted to today. Across five companies, improving retention by 1% raised customer value by about 2.5% to 7%. Improving profit margins by 1% raised it by about 1%, and cutting acquisition cost by 1% by only 0.02% to 0.32%.[^10] Keeping customers mattered most.
The same study ran a bold test: add up the value of a company's current and future customers and compare it with what the stock market said the whole company was worth. For Capital One, the credit card lender, the customer-based estimate was $11 billion against a market value of $14 billion in March 2002. For the online brokers Ameritrade and E*Trade the two numbers were also close. For Amazon, the estimate was only about $0.82 billion against a market value of $5.36 billion. Even assuming Amazon kept every customer forever, its customers came to only about $3 billion. The authors concluded that either the market was overvaluing Amazon or their model was missing "some components of its value."[^10] In hindsight the market's faith in Amazon was justified, which shows the limit of the method: customer counts and churn tell you a lot, but a model built only from past customer behavior cannot see what a loyal customer might buy next.
A later study pushed the method further. Daniel McCarthy, Peter Fader, and Bruce Hardie built a model that used only the customer figures companies publish, such as customers won, customers lost, and customers at the end of each period, then turned them into forecasts of revenue, cash flow, and a share price. Using results released in spring 2015, the model put DISH Network, the satellite TV company, at $64.62 a share, when the stock closed at $66.38 that day. It put Sirius XM, the satellite radio company, at $4.24, when the stock closed at $3.90.[^11] The striking part was how much the answer depended on getting the customer behavior right. Swapping in the customer models from two earlier studies, and holding everything else the same, moved the Sirius XM estimate to $0.41 with one and $6.55 with the other.[^11] Small differences in how fast customers arrive and how long they stay add up to very large differences in value.
Regulators agree that these numbers matter. In 2020 the U.S. Securities and Exchange Commission (SEC) issued guidance on the key measures companies discuss in their annual reports. Its list of examples included "total customers/subscribers," "active customers," "net customer additions," and "number of memberships." It said a company should give "a clear definition of the metric and how it is calculated," explain any change in method and its effect, and consider whether to recast past figures so they match.[^12] In other words, a customer count deserves the same care as any number in the accounts.
But here is the catch, and it is the most important idea in this chapter:
A new customer adds value only if what that customer is worth over their lifetime is more than it cost to win them.
Michael Mauboussin and Dan Callahan treat winning customers as an investment, like building a factory: a customer's lifetime value is the present value of the cash they generate minus the cost to acquire them.[^13] A gym member paying $30 a month, $10 of it profit, who stays 3.3 years is worth roughly $400 before discounting, against a $50 CAC. If the gym gave away a free year to win each member, the count would still rise while each sign-up made it poorer. So this thesis never assumes a rising count is good or a falling one bad. It asks what the growth cost. The Groupon case later in this chapter shows a count that kept rising for years while the business behind it weakened.
The three questions
1. Direction: are net additions speeding up or slowing down?
Compare net adds with the company's history, targets, and peers. Net adds going from 50,000 to 100,000 to 200,000 a quarter are improving. Net adds going from 200,000 to 100,000 to zero are deteriorating, even if the base is at a record high.
2. Engine: more customers in, or fewer customers out?
Net additions of 100 could mean 400 joined and 300 left, or 150 joined and 50 left. The second business is healthier. Growth from lower churn tends to last. Growth from a burst of gross adds can fade as soon as the promotion behind it ends.
3. Cost: what is each new customer costing?
The thesis counts as deteriorating any net additions that "require materially higher acquisition spending." Watch marketing costs, discounts, free trials, and subsidies. Net adds that rise while the cost per customer holds steady or falls are real strength; net adds bought at rising cost may never pay back.
Taking the count apart
The unit matters. A family of four on one phone plan is one account but four lines. Costco ended fiscal 2026 (August 30, 2026) with 84.1 million paid members, up 3.8%, but 150.4 million cardholders, because one membership can carry more than one card.[^14]
Churn varies by industry. U.S. wireless carriers measure churn monthly, in hundredths of a percentage point: Verizon's postpaid phone churn was 0.92% a month in the second quarter of 2026.[^15] Membership retailers measure yearly renewal instead: Costco's worldwide renewal rate was 89.8% at the end of fiscal 2026.[^14] Compare churn only between companies that measure it the same way.
"Active" counts react slowly. Many online businesses count anyone who bought at least once in the past twelve months. Etsy, the online marketplace for handmade and vintage goods, uses that definition, so a shopper who bought one birthday card eleven months ago counts the same as one who buys every week. A trailing count like this changes slowly in both directions. It can keep rising for a while after new sign-ups slow, and keep falling for a while after they recover.
Not all customers are equal. Etsy had 86.5 million active buyers at the end of 2025, down 3.4% in a year. Inside that total, it reported 5.9 million "habitual buyers," people who spent $200 or more and bought on six or more days in the past year. They were only about 7% of active buyers but brought in about 40% of the marketplace's sales, and their number fell 9%.[^16] A 3% dip in the headline count can hide a much larger drop among the customers who matter most. The same filing notes that one person can hold several buyer accounts and be counted once in each of Etsy's marketplaces.[^16] Always ask what one "customer" really is.
How it differs by industry.
- Subscriptions (streaming, phone plans, software sold by the month): the count is paid subscribers, and churn is measured monthly. Watch for free trials and bundles that inflate the count.
- Membership retailers (Costco, warehouse clubs): the count is paid memberships, and the key leak is the yearly renewal rate.
- Marketplaces (Etsy, Groupon, ride-hailing apps): there are two customer bases, buyers and sellers, and each needs the other. Etsy reported 5.6 million active sellers alongside its buyers at the end of 2025.[^16] Counts are usually "active in the past year," with no published churn.
- Business software and services: the number of customers matters less than their size. A thousand small accounts can be worth less than ten large ones, so companies often report how many customers spend over a set amount each year. That overlaps with Existing-Customer Expansion.
- Banks and brokers: the unit is accounts or households, and deposits or assets per account often matter more than the count. The Capital One and Ameritrade results in the research above came from customer counts of this kind.[^10]
Links to other theses. Revenue equals customers times revenue per customer, so this thesis and Existing-Customer Expansion are the two halves of Revenue Growth. More customers is one source of Volume Growth. Price increases, covered in Price and Mix Growth, can push churn up. Customers gained by buying another company are not Organic Growth. The leak in the bucket gets its own chapter, Customer Retention, and whether each new customer earns back what it cost to win is a question of Contribution Margin. Customers stay longer when leaving is costly or annoying, the subject of Switching Costs. On marketplaces, each new buyer can make the service more useful to sellers and the other way round, which is covered in Network Effects.
A worked example: Verizon
Verizon is one of the three big U.S. wireless carriers. Its most-watched number is postpaid phone net additions: the change in phone lines billed monthly. In October 2025, it named Dan Schulman, the former head of PayPal, as chief executive,[^17] and he set out to make that count grow again.
Here are Verizon's total retail postpaid phone net additions and monthly churn:[^18]
| Quarter | Net additions | Monthly churn |
|---|---|---|
| Q1 2025 | −289,000 | 0.95% |
| Q2 2025 | −9,000 | 0.97% |
| Q3 2025 | +44,000 | 0.98% |
| Q4 2025 | +616,000 | 1.02% |
| Q1 2026 | +55,000 | 0.97% |
| Q2 2026 | +184,000 | 0.92% |
For full-year 2025, net additions were 362,000, down from 583,000 in 2024, and churn rose from 0.88% to 0.98%.[^19] At June 30, 2026, Verizon had 94.1 million postpaid phone lines, up 1.0% in a year.[^15]
Direction. Verizon went from losing lines to four positive quarters in a row. Phone sales are seasonal, with a strong holiday quarter and a weak first quarter, so compare each quarter with a year earlier. On that basis, the first half of 2026 brought 239,000 net additions against a loss of 298,000.[^15] The first quarter was Verizon's first positive first quarter since 2013,[^20] and the second quarter's 184,000 beat the analyst consensus of about 106,000.[^21] The direction is improving.
Engine. Late 2025 and 2026 grew in different ways. In the fourth quarter of 2025, Verizon poured water in. Consumer gross additions jumped 15% from a year earlier, to 2.7 million, while churn rose to 1.02%, the highest in the table.[^19] "We went into the ring, we offered a set of promotions," Schulman said. His finance chief blamed elevated churn on "prior pricing actions as well as competition."[^22] In all of 2025, the consumer business won 8.3 million gross additions but only 137,000 net additions.[^19]
In 2026, the leak shrank: churn fell to 0.92% in the second quarter from 0.97% a year earlier.[^15] Schulman said churn had risen 25 basis points (hundredths of a percentage point) over three years and "every single basis point is 90,000 net adds."[^22]
Cost. Verizon said it was lowering acquisition and retention costs. Equipment revenue fell nearly 20%, or more than $1.2 billion, in the second quarter, partly because of "the company's strategic decision to reduce spending on device subsidies." The share of customers upgrading phones fell from 3.6% to 2.6%.[^15] Net additions rising while promotional spending falls fits the thesis's definition of improving.
Two warning signs remain. Verizon's 2026 releases no longer show gross additions, so investors cannot directly see how many joined versus left.[^15] And average revenue per account fell 1.4%, to $168.35 a month, while the number of accounts fell 1.2% even as lines grew.[^15] More lines bringing in less money each is a question for Existing-Customer Expansion.
Peers. The thesis also compares a company with its rivals. In the same quarter, AT&T reported 432,000 postpaid phone net additions with churn of 0.86%.[^23] Verizon's 184,000 was less than half that, and its churn was still higher. So Verizon was improving against its own past but still trailing at least one big rival. Peer comparisons are getting harder, though: T-Mobile, the third big carrier, stopped reporting postpaid phone net additions in 2026.[^24]
What the churn change is worth. Small churn numbers hide big differences in how long customers stay. At 0.98% a month, Verizon's 2025 average, the average line lasts about 1 ÷ 0.0098 ≈ 102 months, or 8.5 years. At 0.92%, it lasts about 109 months, or 9.1 years. That is roughly seven extra months of bills from every line, with no extra marketing spent to win it. This is why Schulman spoke of churn in single basis points.
The thesis. Verizon guided for 2026 net additions in the upper half of a 750,000 to 1.0 million range.[^15] An investor could state: "Verizon's customer base is growing again because fewer customers are leaving, not because of promotions." To make it checkable: "Verizon reports full-year 2026 total retail postpaid phone net additions of at least 875,000, with full-year postpaid phone churn at or below 0.95%." After 239,000 in the first half, that needs about 636,000 in the second half, close to what Verizon added in the fourth quarter of 2025 alone.
Each report moves the odds. A strong third quarter with churn still falling makes the thesis more likely. A fourth quarter driven by bigger subsidies might hit the number but undercut the "not because of promotions" claim. It resolves with Verizon's January 2027 results.
It helps to write down in advance how each kind of news would update the view:
| Evidence in the next two reports | What it says about the thesis |
|---|---|
| Net additions on track for 875,000 or more, churn at or below 0.95%, equipment revenue and upgrade rates still falling | Strongly supports it: more customers, fewer leaving, less spent per customer |
| Net additions on track, but churn back near 1% and promotions or subsidies rising again | Hits the number but fails the "not because of promotions" test; treat as stable at best |
| Net additions short of 875,000, churn still falling | The leak is shrinking but the inflow is weak; partly supports the engine claim, fails the count |
| Net additions short and churn rising | Deteriorating: the 2026 recovery did not last |
Writing the rule down before the results arrive keeps you honest. It stops you from deciding afterward that whatever happened was what you expected.
The other direction: Groupon, 2010–2014
Verizon shows a count recovering. Groupon shows how a count can climb while the business behind it weakens.
Groupon emailed its subscribers a discount every day, such as half off a local restaurant or spa, and kept a cut of each sale. It counted active customers: people who had bought at least one Groupon in the past twelve months. That number went from 8.9 million at the end of 2010 to 33.7 million at the end of 2011, almost four times as many in a year.[^25] The growth was bought. Marketing spending was $290.6 million in 2010 and $768.5 million in 2011.[^26]
When Groupon filed to sell shares to the public in June 2011, it led with a profit measure of its own design, "Adjusted CSOI." That measure left out "online marketing expense," which the filing said "primarily represents the cost to acquire new subscribers." On that basis Groupon showed a 2010 profit of $60.6 million. Under standard accounting, it had an operating loss of $420.3 million that year.[^27] In plain words, the company asked investors to judge it with the cost of winning customers taken out. That cost is exactly what the third question in this chapter asks about.
The filing did offer one useful piece of evidence. Groupon said it spent $18.0 million on online marketing to win North American subscribers in the second quarter of 2010, and that this group produced $61.7 million of gross profit in the four quarters to March 2011.[^27] That is the right kind of test, the lifetime value of a group of customers against what it cost to win them. But it was one early group, picked by the company, from a time when daily deals were new. By the final prospectus in November 2011, Adjusted CSOI had been dropped in favor of a measure that kept marketing in, and the shares were sold at $20.[^28]
Here is what happened next.
| Year | Active customers (millions) | Marketing ($ millions) | Gross profit ($ millions) | Net loss to Groupon ($ millions) |
|---|---|---|---|---|
| 2011 | 33.7 | 768.5 | 1,351.6 | 279.4 |
| 2012 | 40.6 | 336.9 | 1,615.5 | 54.8 |
| 2013 | 43.7 | 214.8 | 1,501.5 | 95.4 |
| 2014 | 53.9 | 269.0 | 1,549.2 | 73.1 |
Sources: active customers from the 2011 and 2014 annual reports, with 2012 and 2013 as corrected in the 2014 report; financial figures from the 2014 annual report.[^25][^26]
Run the three questions. Direction: the count kept rising, by about 60% from 2011 to 2014. Engine: a count of "anyone who bought once this year" cannot separate loyal buyers from one-time bargain hunters, and Groupon did not publish churn. The amount each customer spent did weaken: gross billings (the total customers paid, before Groupon's share went to merchants) per average active customer fell from $144.84 in 2012 to $136.69 in 2013.[^26] Cost: marketing fell after 2011, but gross profit hardly grew and the company lost money every year. In 2012 alone, as the count rose about a fifth, the share price fell from its $20 offering price to a low of $2.60.[^29]
The count itself also proved slippery. Groupon later lowered its reported active customers for 2012 from 41.0 million to 40.6 million, and for 2013 from 44.9 million to 43.7 million, "to correct that operational information."[^26] The jump to 53.9 million in 2014 included Ticket Monster, a South Korean deals company bought on January 2, 2014. Groupon sold it in May 2015, and once Ticket Monster was removed, 2014 was restated at 47.4 million.[^26][^30] The 2016 count of 52.7 million included about 1.0 million customers from buying LivingSocial.[^30]
After that, even the count turned. Active customers fell to 43.6 million in 2019.[^31] By 2023 they were 16.5 million, and at the end of 2025, 16.2 million.[^32][^33] Looking back, the rising count of 2012 to 2014 was never the good news it seemed. It was growth in the number of people who had tried the product, not proof that winning them was worth what it cost.
Common traps
- Bought customers. Verizon's fiber broadband connections jumped 43%, to 10.9 million, in the year to June 2026, but first-half fiber net additions were only 282,000.[^15] Most of the jump came from buying Frontier Communications in January 2026.[^20]
- Recasts. Verizon first reported about 887,000 postpaid phone net additions for 2024. A year later, after reclassifying some connections, it showed 583,000 for the same year.[^34] Use the latest presentation.
- Disappearing disclosure. Netflix stopped quarterly member counts in 2025,[^7] and T-Mobile stopped reporting postpaid phone net additions in 2026, emphasizing account additions instead.[^24] When a number vanishes, ask why.
- Promotional sugar highs. Free phones and free months can lift one quarter. Verizon's fourth quarter of 2025 brought its biggest net additions in the table and its highest churn at the same time.[^19] Watch what follows.
- Free or inactive users. A big count of non-paying users is not a big count of customers. Netflix's more than 100 million password-sharing households were viewers, not customers, until paid sharing turned some of them into payers.[^1]
- Profit with the customer cost taken out. Groupon's first filing showed a profit measure that excluded the marketing spent to win subscribers, turning a $420.3 million operating loss into a $60.6 million "profit."[^27] Any measure that leaves out acquisition cost cannot tell you whether growth pays.
- Corrected counts. Customer counts are not audited the way revenue is. Groupon later lowered two years of its active customer figures "to correct that operational information."[^26] Check whether past figures have quietly changed.
- One-time events in the count. Netflix's first-quarter 2022 loss included about 700,000 members lost when it left Russia.[^1] Strip out one-time events, in both directions, before judging the trend, but do not let them excuse a weak underlying number.
- A healthy total hiding a weak core. Etsy's active buyers fell 3.4% in 2025, but its habitual buyers, who brought in about 40% of sales, fell 9%.[^16] Look for any breakdown of the best customers.
Checklist
When you study a company's customer base growth, ask:
- What unit is counted, and has the definition changed or been recast?
- What were net additions in recent periods, compared with the same period a year earlier? Are they speeding up or slowing down?
- How much came from gross additions, and how much from changes in churn?
- How does churn compare with the company's history and with peers that measure it the same way?
- What does each new customer cost, and are promotions or subsidies doing the work?
- Did any customers arrive through acquisitions, or leave through sales of a business or exits from a country?
- Are new customers worth more over their lifetime than they cost? Does the company give any evidence, such as how a group of customers who joined in one period has paid back over time?
- If the count is "active in the past twelve months," how much of it is one-time buyers, and is the most valuable group growing or shrinking?
- How do net additions and churn compare with the closest rivals in the same period?
- Has any customer measure stopped being reported, and what does the company now show instead?
Key takeaways
- Customer base growth counts customers after subtracting those who leave, separate from how much each spends.
- Net additions = gross additions − customers lost. Small monthly churn adds up to large yearly losses.
- Judge it on direction (are net adds accelerating), engine (more joining or fewer leaving), and cost (what each new customer costs).
- More customers create value only when each is worth more over their lifetime than it cost to win them. Groupon's count rose about 60% from 2011 to 2014 while it kept losing money.
- Research shows customer counts and churn help explain stock prices, but only when the unit is defined clearly and measured the same way over time.
- Check the definition, the corrections, the bought customers, and the best customers before trusting any headline count.
Data needed to support this thesis
To build and keep updating a customer base growth thesis, you need the following data.
Required
| Data | What it tells you | Where to find it |
|---|---|---|
| Customer metrics | The number of customers, subscribers, or accounts, and the net additions, gross additions, and churn behind it | Results releases, earnings calls, and the key metrics section of annual and quarterly reports (Forms 10-K and 10-Q) |
| Customer history | Whether net additions are speeding up or slowing, compared with the same period a year earlier | The same metrics across at least three comparable periods, with any restated figures noted |
Helpful
| Data | What it tells you | Where to find it |
|---|---|---|
| Cohort data | Whether customers who joined in a given period stay and keep paying, and whether they earn back what they cost | Investor presentations, earnings calls, and sometimes IPO filings (Groupon's showed one group's payback); few companies publish it in full |
| Channel data | Which routes bring in customers, and what each costs | Results releases and investor days; sales and marketing expense in filings |
| Web traffic | Early signs of interest before customers show up in reported numbers | Web analytics and app-download data providers |
| Acquisition cost | What it costs to win and keep a customer | Marketing and device-subsidy lines in filings; commentary on earnings calls |
The comparisons must be like-for-like. Companies sometimes redefine what counts as a customer, reclassify connections, or add customers through an acquisition. Use the latest version of the history, and separate bought customers from earned ones. Sales of a business work the other way: Groupon's 2014 count dropped from 53.9 million to 47.4 million once a business it later sold was taken out.[^30]
The thesis is usually updated by three kinds of events: earnings releases (new customer counts), customer metric updates (new churn or account figures between reports), and product launches (new plans or offers that change who signs up). A typical horizon for checking the thesis is about a year and a half.
In the Verizon example, the required data was its quarterly postpaid phone net additions, churn, and line counts, together with the history across several years, from its earnings releases.[^15][^18][^19][^34] The helpful data was the cost side: gross additions, device-subsidy spending, and the share of customers upgrading phones.[^15][^19] For the peer comparison it used AT&T's results for the same quarter.[^23] The example used no cohort data, channel data, or web traffic. It also noted that Verizon stopped showing gross additions in its 2026 releases.[^15] The Groupon case used active customers, marketing spending, gross profit, and net losses from its annual reports, plus the one cohort its IPO filing disclosed.[^26][^27]
[^1]: Netflix, First Quarter 2022 Letter to Shareholders (April 19, 2022). SEC filing. [^2]: CNBC, "Netflix closes down 35% wiping more than $50 billion off market cap" (April 20, 2022). CNBC. [^3]: Netflix, Second Quarter 2022 Letter to Shareholders (July 19, 2022): paid net additions of −0.97 million against a forecast of −2.0 million. SEC filing. [^4]: Netflix, Second Quarter 2023 Letter to Shareholders (July 2023), on the May 23, 2023 rollout of paid sharing. SEC filing. [^5]: Netflix, Third Quarter 2023 Letter to Shareholders (October 18, 2023): 8.8 million paid net additions versus 2.4 million in the third quarter of 2022, "due to the roll out of paid sharing, strong, steady programming and the ongoing expansion of streaming globally"; average revenue per membership down 1% year over year. SEC filing. [^6]: Netflix, Fourth Quarter 2023 Letter to Shareholders (January 23, 2024): 13.1 million paid net additions, "our largest Q4 ever." SEC filing. [^7]: Netflix, Fourth Quarter 2024 Letter to Shareholders (January 2025): 260.28 million paid memberships at end-2023 and 301.63 million at end-2024; quarterly reporting of memberships to end from Q1 2025. SEC filing. [^8]: Eli Amir and Baruch Lev, "Value-relevance of nonfinancial information: The wireless communications industry," Journal of Accounting and Economics 22 (1996). ScienceDirect. [^9]: Massimiliano Bonacchi, Kalin Kolev, and Baruch Lev, "Customer Franchise—A Hidden, Yet Crucial, Asset," Contemporary Accounting Research 32 (2015). Wiley. [^10]: Sunil Gupta, Donald R. Lehmann, and Jennifer Ames Stuart, "Valuing Customers," Journal of Marketing Research 41 (2004); firms studied were Capital One, Amazon, Ameritrade, eBay, and E*Trade; customer-value and market-value comparisons as of March 31, 2002 are from the authors' version. SAGE; author version. [^11]: Daniel M. McCarthy, Peter S. Fader, and Bruce G. S. Hardie, "Valuing Subscription-Based Businesses Using Publicly Disclosed Customer Data," Journal of Marketing 81 (2017): implied share prices of $64.62 for DISH Network (actual $66.38 on May 11, 2015) and $4.24 for Sirius XM (actual $3.90 on April 28, 2015), and $0.41 and $6.55 for Sirius XM under two earlier customer models. Figures from the authors' accepted version. SAGE; author version, London Business School. [^12]: U.S. Securities and Exchange Commission, "Commission Guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations," Release No. 33-10751 (January 30, 2020; effective February 25, 2020). SEC. [^13]: Michael J. Mauboussin and Dan Callahan, "The Economics of Customer Businesses," Counterpoint Global Insights, Morgan Stanley Investment Management. Morgan Stanley; excerpt at The Acquirer's Multiple. [^14]: Costco Wholesale, fourth-quarter fiscal 2026 earnings call (September 24, 2026). Transcript, The Motley Fool; results release. [^15]: Verizon, second-quarter 2026 earnings release (July 24, 2026). SEC filing. [^16]: Etsy, Annual Report on Form 10-K for 2025 (filed February 19, 2026): 86.5 million Etsy marketplace active buyers at December 31, 2025, down 3.4%; 5.6 million active sellers; 5.9 million habitual buyers, down 9%, about 7% of active buyers and about 40% of 2025 GMS; definitions of active and habitual buyers. SEC filing. [^17]: Verizon, "Verizon Announces CEO Transition" (October 6, 2025). Verizon. [^18]: Verizon earnings releases for Q3 2025 (Consumer plus Business), Q4 2025, Q1 2026 (for Q1 2025 and Q1 2026), and Q2 2026 (for Q2 2025 and Q2 2026). The 2025 quarters sum to the full-year 362,000. [^19]: Verizon, fourth-quarter 2025 earnings release (January 30, 2026), including Consumer gross and net additions. SEC filing. [^20]: Verizon, first-quarter 2026 earnings release (April 27, 2026); Frontier included from the January 20, 2026 closing. SEC filing. [^21]: Yahoo Finance, "Verizon Q2 2026 earnings: subscriber growth beats estimates" (July 24, 2026). Yahoo Finance. [^22]: Verizon fourth-quarter 2025 earnings call (January 30, 2026), remarks by CEO Dan Schulman and CFO Anthony Skiadas. Transcript, The Motley Fool. [^23]: AT&T, second-quarter 2026 earnings release (July 22, 2026): 432,000 postpaid phone net additions with postpaid phone churn of 0.86%. SEC filing. [^24]: Roger Entner, "What T-Mobile stopped telling you about Q1 2026," Light Reading (May 5, 2026). Light Reading. [^25]: Groupon, Annual Report on Form 10-K for 2011 (filed March 30, 2012): active customers of 8.9 million at December 31, 2010 and 33.7 million at December 31, 2011. SEC filing. [^26]: Groupon, Annual Report on Form 10-K for 2014 (filed February 13, 2015): selected financial data for 2010–2014 (marketing, gross profit, net loss attributable to Groupon); TTM active customers of 53.9 million (2014), 43.7 million (2013, corrected from 44.9 million), and 40.6 million (2012, corrected from 41.0 million); gross billings per average active customer; Ticket Monster acquisition on January 2, 2014. SEC filing. [^27]: Groupon, Registration Statement on Form S-1 (June 2, 2011): definition of Adjusted CSOI excluding online marketing expense; 2010 Adjusted CSOI of $60.6 million and loss from operations of $420.3 million; second-quarter 2010 North American subscriber economics. SEC filing. [^28]: Groupon, final prospectus (Form 424B4, November 7, 2011): initial public offering price of $20.00 per share; CSOI as the key non-GAAP measure. SEC filing. [^29]: Groupon, Annual Report on Form 10-K for 2012 (filed February 27, 2013): active customers of 41.0 million at December 31, 2012 as first reported; quarterly high and low share prices, including a fourth-quarter 2012 low of $2.60. SEC filing. [^30]: Groupon, Annual Report on Form 10-K for 2016 (filed February 15, 2017): TTM active customers of 52.7 million (2016, including about 1.0 million from LivingSocial), 48.9 million (2015), and 47.4 million (2014, excluding Ticket Monster, sold in May 2015). SEC filing. [^31]: Groupon, Annual Report on Form 10-K for 2019 (filed February 18, 2020): TTM active customers of 43.6 million (2019), 48.2 million (2018), and 49.5 million (2017). SEC filing. [^32]: Groupon, Annual Report on Form 10-K for 2023 (filed March 15, 2024): TTM active customers of 16.5 million (2023) and 18.8 million (2022). SEC filing. [^33]: Groupon, Annual Report on Form 10-K for 2025 (filed March 10, 2026): TTM active customers of 16.2 million (2025) and 15.4 million (2024). SEC filing. [^34]: Verizon's fourth-quarter 2024 release reported 2024 postpaid phone net additions of 341,000 (Consumer) and 546,000 (Business). The fourth-quarter 2025 release shows 583,000, citing reclassified "second number" connections among other adjustments.